Marketing Strategy Business Plan
Last year the doors to 898,000 new businesses opened in the United States for the first time. Most of these businesses were created by entrepreneurs who envisioned an opportunity to develop a new product or service, and pursued that vision in search of independence and financial reward. While these visionaries started with solid ideas to form the foundation of their new ventures, most do not have many of the skills necessary to transform their ideas into reality. Additionally, the scarcity of talent in today’s market makes it extremely difficult for small business owners to attract and retain those skills.
The Cambridge Strategy Group (CSG), L.L.C. is dedicated to providing marketing and management consulting services to small and emerging businesses looking for opportunities to increase their potential for success. Unlike traditional management consulting firms that focus on analyzing problems for large customers, CSG works exclusively with small business clients to develop concrete, practical, short-term action plans that will start moving their businesses in the right direction. The Cambridge Strategy Group takes advantage of the small business owners’ need for marketing and management skills, the scarcity of those skills in the market, and the lack of any major competitor owning the concept of “small business consulting.”
The CSG management team brings a broad range of industry experience and training from both energetic small firms and experienced industry leaders.
John B. Gordon, Executive Director: John has worked in marketing, business development, and corporate strategy for a number of small and large firms, including EMC Corporation, IBM Corporation, and Larscom, Incorporated. John’s participation on the North Carolina Council for Entrepreneurial Development, plus his experience providing consulting services to small businesses, catalyzed the formation of the Cambridge Strategy Group.
Todd D. Kuczaj, Managing Director: Todd has worked in Internet consulting, Web design/development, financial services, and media publications for a variety of companies, including a Big Five consulting firm, Integrated Information Systems Inc., SunAmerica Securities Inc., and the Foothills Sentinel. Todd currently functions as an experienced analyst for a Big Five consulting firm, working with Fortune 100 and Fortune e-50 firms to solve their business and technology issues.
Ben S. Cordell, Managing Director: Ben has worked in business development, account management, systems engineering, marketing, and product development positions at LifeServ and ONE Co. (formerly DC Systems). Ben currently functions as a corporate strategy specialist at LifeServ, discovering and developing merger, acquisition and strategic partnership opportunities.
1.1 Keys to Success
UNIQUENESS OF SERVICES
The Cambridge Strategy Group is focused specifically on helping small and emerging businesses maximize their potential for success. We combine Blue Chip training with small business experience and local presence. We differentiate ourselves in the following ways:
Focus on small business. We place our best people on small business customers. Our mission is to help small businesses of today become the leading corporations of tomorrow. Cambridge Strategy Group will attempt to own the words “small business” in the minds of our potential clients.
Cost-effective personal interaction with local consultant presence. Personal interaction provides small businesses with a level of comfort not available with remote consultants. There may be many occasions where the small business founders may ask the consultant to simply “stop by,” to react to a new development, or to answer a question. While this local presence and personal interaction is highly valued, business owners are often unable to afford the cost associated with bringing consultants to them from other areas.
A diverse network of consultants and alliance partners. Solving the unique problems that face small businesses today demands a wide range of skills and experiences. By relying on a nationally distributed talent base coordinated to work together remotely, Cambridge Strategy Group will be able to bring together the skills required by a particular client without incurring the expense of physically bringing all of the individuals together. In the book, 22 Immutable Laws of Marketing, authors Al Ries and Jack Trout note that being first in the customer’s mind is more important than being the overall leader. In the world of small business, this is particularly true. With 898,000 small businesses starting each year, there is a significant opportunity for a consulting firm such as Cambridge Strategy Group to become the “first” consulting firm dedicated exclusively to small businesses in the minds of a number of these potential clients.
The firm has very small capital requirements. Any capital that the firm obtains will be used to promote the “small business focus” of the firm and cover basic operational costs. For the firm to realize its full potential, the founders would require compensation equivalent to full-time employment while pursuing initial clients and creating a backlog of work requests. This would most likely need to cover at least one year’s salary for each of the three managers. Additionally, funding for initial marketing projects would help to ensure that the firm could establish a claim to the “small business consulting” concept in the target market. In exchange for the funding, CSG would provide an equity stake to the funding company. Ideally, we would like to work with the funding company to help its other clients succeed.
Cambridge Strategy Group is a North Carolina-based consulting firm that responds to entrepreneurs’ need for practical business and marketing services to turn their innovative ideas into successful business ventures. Through interaction with a number of aspiring entrepreneurs, the founders of the Cambridge Strategy Group discovered a ready market of clients who were eager to take advantage of the founders’ skills, understanding, and insight into their businesses. The Cambridge Strategy Group is exclusively focused on small businesses. Our goal is to own the idea “small business” or “small business consulting” in the minds of our target market.
The Cambridge Strategy Group has identified a real business opportunity that has been neglected by earlier consulting firms due to its complex customer base. Below, we have identified the opportunities and threats in the environment, as well as our particular strengths and weaknesses that will enable us to succeed:
OPPORTUNITIES AND THREATS
The Cambridge Strategy Group has analyzed the market and believes that a real opportunity exists to provide services to small businesses. The following paragraphs describe the environment in which the company will compete, and the key success factors necessary to perform well.
Opportunities – The number of new businesses starting each year in the U.S. and specifically in the Triangle Area of North Carolina create a sizeable market. Many of these businesses are started by an entrepreneur with a solid idea, but little experience in creating the formal business strategies or marketing deliverables necessary to turn their idea into a successful business. With recent IPOs giving back much of their initial valuations, companies are now being forced to demonstrate profitable business models in order to maintain strong valuations. Venture capitalists need to focus on making their existing companies successful instead of simply prospecting for the next great idea. To accomplish this, founders need to effectively define and communicate their value propositions. Since this is not a core competency for many entrepreneurs, there is an opportunity to provide this skill set through outsourcing arrangements. Additionally, founders need experience in sales and marketing to exploit market opportunities and create early revenue wins. Finally, no business currently exists with dominant mind-share as a “small business consulting” firm.
Threats – Businesses in the early stages of their life cycles, usually through the Angel funding stage, tend to have extremely tight budgets. Once the business reaches the venture-funded stage, it often has more cash to devote to outsourcing of non-core competencies. Barriers to entry in this market are extremely low. Successful consultants will have to work to earn a few client successes and then aggressively build a reputation as the “small business consultants.” Building a reputation will require funding. High-profile consulting firms could quickly enter this market. In order to keep costs low, it is assumed that they would begin out of a major office, leaving the Triangle Area of North Carolina available. However, low cost of living in the Triangle Area may facilitate expansion. Establishing area contacts will be critical to hedge against new firms entering the area.
The Cambridge Strategy Group portfolio is designed to provide targeted marketing and management services to small businesses. From helping entrepreneurs define their business plans to improve their chances for obtaining venture funding, to creating concrete marketing deliverables to promote their original ideas, the Cambridge Strategy Group seeks to help small businesses at various stages of development. Our services fall into four major categories.
The Cambridge Strategy Group helps entrepreneurs build a solid managerial foundation from which the rest of their business can expand and grow. We construct organizational development blueprints for young firms searching for a solid structure to build upon, and assist in constructing business plans for fledgling companies to improve their chances of obtaining venture funding. CSG offers insights and ideas for how small businesses can discover and sustain their competitive advantage in today’s business landscape where a lack of continuous and constant innovation can be fatal. Furthermore, we offer expertise in other areas such as profit modeling to assist small businesses in their future planning, especially in today’s market where heavy emphasis has been placed upon a company’s ability to show profits rather than pure growth.
Deciding how to present an innovative idea to the market is critical. We have expertise in turning that idea into a successful business venture. Our market planning services help small business founders determine the best messaging for their companies through market and competitive analysis.
We then take the information gained in our analyses and create an effective marketing mix encompassing all of the elements of product or service definition. Finally, we can help our clients develop a launch plan to give their product or service a good chance at success. When necessary, we will help to develop marketing or business development partnerships.
Through our past experience in media operations, CSG provides expertise in a variety of communication formats. CSG composes professional press releases for the media as well as business proposals of all types for both clients and partners. Furthermore, with our understanding of how important company name recognition is to the initial success of small businesses, we help companies create and establish their image through proven branding techniques. CSG can also create marketing/sales collateral, business cards, and other business materials when needed by our clients.
3.1 Service Description
The Cambridge Strategy Group offers four types of services to help small and emerging businesses at various stages of their business development. Our services range in scope from helping to turn a business strategy into a detailed set of concrete actions and milestones, to creating websites and writing collateral for businesses lacking marketing expertise. These tailored services solve the problem of finding marketing talent while minimizing costs.
Management consulting: business strategy, organizational development, profit modeling, sustainable competitive advantage identification;
Market planning: market analysis, value proposition creation, partnership identification, marketing mix development, launch strategies, messaging;
Communication services: press release development, proposal writing, image creation, marketing/sales collateral construction;
Technology: website development, Web hosting, email enablement.
The Cambridge Strategy Group understands the importance of implementing the technological components of a small business as soon as possible in order to facilitate communication between the company and its clients, employees, and partners. Therefore, we offer assistance in email enablement as well as phone and fax set-up. CSG also offers expertise in constructing an Internet presence through Web development and Web hosting.
3.3 Future Services
The Cambridge Strategy Group has a three-part strategy for managing business growth. Initially, CSG will be based out of the Triangle Area of North Carolina, which was ranked #3 on the sixth annual listing of Dun and Bradstreet’s “Best Cities for Small Business” from Entrepreneur magazine.
Starting from North Carolina, our three-part growth strategy is as follows:
- Expansion of Consulting Team: We will add new consultants in other U.S. and foreign cities to increase our skill base and provide more “points of local contact” for our clients.
- Introduction of New Services: New team members will bring new skills and potentially allow us to offer new services to our small business clients. One possible example is helping small businesses expand their operations overseas.
- Evolution of Business Operations: While our initial clients will be obtained through our consultants, ultimately we will create alliances with Venture Capital firms. Our goal is to work with clients and Venture Capital firms to help turn business ideas into successes.
Market Analysis Summary
The Cambridge Strategy Group intends to enter the market for providing marketing and management consulting services to new and emerging small businesses. The sections below discuss our analysis of the environment, the target market, our competitors, and the company.
The environment is well suited for the Cambridge Strategy Group. While the market for startups and skyrocketing IPOs appears to be cooling off, this slowdown provides an opportunity for CSG to establish a presence in the small business arena before the next growth period.
4.1 Market Segmentation
The following factors define the environment in which CSG hopes to succeed.
Physical: New businesses are being formed across the United States every day. Providing consulting services to these businesses will require local presence. North Carolina’s Triangle Area has recently been rated as one of the top three metropolitan areas for small businesses by Dun and Bradstreet’s Entrepreneur magazine.
Legal: The creation of the Limited Liability Company has made it very simple for new businesses to organize as formal business entities. Limited Liability Companies are ideal for small businesses as they avoid the double taxation characteristic of C Corporations, while providing limited liability for the company members.
Economic: Current economic conditions are continuing to challenge investors’ views regarding the potential for return. The market is no longer rewarding entrepreneurs solely on the strength of their ideas. Instead, business owners and Venture Capitalists are expected to show profitability before they will be allowed to reap the rewards of their hard work. While small business owners bring innovative ideas and possibly leadership qualities to their organization, they will need to rely upon skills from other disciplines, including marketing, to succeed.
Social: According to a Small Business Administration report, U.S. small business is at an all-time high (The Facts About Small Business, 1999) “interest in owning or starting a small business has broken new records [between 1993 and 1998].” While recent stock market corrections may have frightened a segment of potential entrepreneurs, the opportunity for financial reward keeps many small business owners diligently chasing their dreams.
Technological: Recent advances in technology have greatly enhanced the ability for distributed teams to work together on common projects. The proliferation of the Internet facilitates data sharing and communication. Voice-over-IP technology reduces the cost of conversation between CSG members working across the country.
With these conditions in mind, CSG will concentrate on initially building clients in the North Carolina area before expanding into other areas. We will be concentrating on all businesses that employ less than 100 individuals. CSG will not segment its market to any greater degree since the company wants to build clients as quickly as possible.
4.2 Target Market Segment Strategy
The target market is defined by the customer needs that create the market, the structural forces that govern operation within the market, and the attractiveness of the market based on strategic value, market size, market growth, and potential for profit. Each of these areas is described below.
Particular market forces affect the ability of the Cambridge Strategy Group to succeed. These forces are identified below:
Buyer Power: With almost 900,000 new businesses starting each year, there is ample demand for consulting services. If any particular business chooses to work with another consulting firm, there are still a large number of firms that can be targeted by CSG. Buyers have power in this market, but the size of the market makes it unlikely that buyer power will have any significant negative impact on the consulting firm.
Threat of Conventional Competitors: No other conventional competitor owns the idea of “small business consulting” in the minds of today’s business owners. A number of high-profile management and marketing consulting firms exist, yet most of these firms have a reputation for being expensive and much too theoretical for small business owners who have practical, short-term concerns. Still, there is potential for these firms to open distinct teams of consultants focused on this market place. These teams would have particular strength in an area where the competitors already have an established consulting presence, such as the major U.S. cities. By beginning our efforts in the Triangle Area of North Carolina, Cambridge Strategy Group will exploit an area that has a very strong market of small businesses, yet does not have many high-profile competitor offices outside of tax specialists. No smaller competitor has emerged in this area.
Supplier Power: Suppliers have minimal power over a consulting firm. The www.cambridgestrategy.net website URL as well as all of the Cambridge Strategy Group email addresses are owned by CSG. Our Web-hosting provider can be changed quickly in the event of any disruption of service. CSG intends to work with third party alliance partners to fulfill client projects. For example, CSG is in the process of entering into an agreement with a Web development firm. This supplier will provide website development for the www.cambridgestrategy.net website in exchange for first right of refusal for future client projects. Contractual stipulations have given the Group legal remedies to terminate the contract due to cost, quality, or time issues with the supplier. By crafting supplier contracts in a careful manner, we hope to limit our exposure to risk due to suppliers’ power.
Threat of Substitutes: Potential substitutes are a very real threat. Venture Capitalists could add more consulting services to their portfolio in order to have more points of contact with the new business. Additionally, non-profit groups such as the Council for Entrepreneurial Development offer basic business plan services, primarily focusing on pre-Angel businesses. Cambridge Strategy Group intends to form relationships with each of these potential substitutes. By working with Venture Capitalists, CSG is able to provide a set of core competencies in marketing and business strategy that complements the VCs funding and business model assessment competencies. Also, by becoming more involved with the Council for Entrepreneurial Development and other non-profit organizations, CSG will gain access to a number of firms who will be potential prospects for marketing consulting once they receive their initial funding.
Threat of New Entrants: This threat is significant as there are very few barriers to entry in a consulting market. Consulting firms do not normally have significant intellectual property that can be patented, and the requirements for creating these firms are minimal. Fortunately, the size of the new business market should sustain a number of firms in this area. The Cambridge Strategy Group will focus on gaining ownership of the idea “small business consulting” in the mind of the market. By owning that idea, CSG will minimize its exposure to new consulting firms with similar targets. Owning this idea is an expensive task that will have to start locally and move from one city to another as the company expands.
4.2.1 Market Growth
According to recent research from the U.S. Small Business Administration office, a record number of new small businesses opened their doors in 1998. This record was broken again in 1999 as the overall small business market grew 1.5%. The growth of the market is not nearly as important to the Cambridge Strategy Group as its size. CSG will need to focus on how to capture the most out of the existing market, even if it declines in size, before thinking about expanding. Potentially, the low growth may dissuade some competitors from entering the market, providing the Cambridge Strategy Group with an opportunity to capture market- and mind-share before more competitors enter.
The Cambridge Strategy Group is entering the market for small business marketing and management consulting services. The growing number of small businesses in the United States, particularly in the Triangle Area of North Carolina, constitute an enormous potential client base that demands the skills provided by the Cambridge Strategy Group.
Strategic Value: The small business consulting market is a strategic, and available, segment for the Cambridge Strategy Group. Many companies are able to get customers to associate a particular concept or idea with their firm. To date, there is no clear association for “small business consulting.” Over time, the Cambridge Strategy Group will attempt to capture this association.
Market Size: The size of the market is an important factor. While the large number of small businesses starting each year will make it difficult to gain significant share of the market in the near term, it does help to ensure that there will be initial customers available to the Cambridge Strategy Group.
Potential for Profit: The potential for profit in this segment is very high. The operating costs required to address this segment are minimal, allowing a majority of service revenue to be turned directly into profit. While the barriers to competitive entry may be fairly low, no clear leader has gained the mind-share of the potential client market. Additionally, based on the overwhelming size of the market and the distributed nature of the potential clients, it is unlikely that any competitor will be able to dominate the market in the near future.
4.2.2 Market Trends
The industry is ideal for the emergence of a firm such as the Cambridge Strategy Group. The following facts were listed in a November 1999 report published by the U.S. Small Business Administration:
In 1998; 898,000 new businesses opened in the United States – the most ever.
Interest in owning or starting a small business has broken new records over the last five years and part-time entrepreneurs have dramatically increased.
From 1994 to 1998, about 11.1 million net new jobs were added to the economy. According to Cognetics, Inc., virtually all were generated by small firms with fewer than 500 employees. Microbusinesses with 1-4 employees generated 60.2 percent of the net new jobs over this period; firms with 5-19 employees contributed another 18.3 percent.
Of the 4.5 million workers in high-technology occupations (scientists, engineers, computer programmers, and analysts), 37.9 percent worked in small firms in 1996.
Firms were started for very traditional reasons. Entrepreneurs had a clear perception of an opportunity to develop a business through a new product, coupled with a desire for both independence and financial reward.
The marketing strategy most frequently cited by respondents was either to be the first to the market with a new product or to find a market niche and develop it. These companies much less frequently wait for a market to develop.
Additionally, the fact that the stock market has been slowing during the past year will likely take some of the glitter off of the small business market. This will allow the Cambridge Strategy Group to establish a market presence and prepare to grow during the next period of rapid investment.
4.2.3 Market Needs
Within the small business market, there are a number of segments, each with distinct objectives, resources, and needs.
4.3 Service Business Analysis
The Cambridge Strategy Group is poised to take advantage of the trends identified above. By combining the marketing and management experience, small business focus, and local presence in key markets, the Cambridge Strategy Group will help the growing number of small businesses increase their chances for success.
The Cambridge Strategy Group is a Limited Liability Company designed to offer limited liability to the members. CSG is incorporated in North Carolina where it will initially focus its operations. The rapidly growing Triangle Area of North Carolina, which includes Raleigh, Durham, Chapel Hill, and Research Triangle Park, was recently ranked #3 on the list of large metropolitan areas in Dun and Bradstreet’s Entrepreneur magazine’s sixth annual listing of the “Best Cities for Small Businesses.” CSG’s initial address is in Chapel Hill, North Carolina. However, with consultants distributed across the nation, CSG can easily expand its target client base to encompass other regions through the use of existing and tested technology. Currently, our consultants live in or near Phoenix, AZ; Chicago, IL; and Boston, MA in addition to Chapel Hill, NC.
4.3.1 Competition and Buying Patterns
Competitors to the Cambridge Strategy Group fall into four categories:
- Segment Rivals: Segment Rivals offer the exact same services as the Cambridge Strategy Group. These firms must focus exclusively on small businesses and offer marketing and/or management strategy services. While the market is certainly large enough to sustain multiple segment rivals, the Cambridge Strategy Group will attempt to ensure that its name is well known in all its target markets.
- Market Rivals: There are a number of available Market Rivals who compete with the Cambridge Strategy Group while having slightly different business focuses. Examples of market rivals include start-up focused branches of Big Five Consulting Firms, Management Consulting Firms, and Venture Capitalists who also provide business services. The Cambridge Strategy Group will attempt to compete with these firms by demonstrating its focus on “small business consulting.”
- Generic Rivals: Generic Rivals represent alternative solutions. The main alternative to outsourcing work to a consulting firm is performing the work in-house. The Cambridge Strategy Group will attempt to demonstrate the value of outsourcing marketing and management work to a consulting firm in order to (1) utilize the core competencies of the consulting firm and (2) reduce the costs associated with hiring full-time employees.
- Structural Rivals: Structural Rivals are the forces inherent in the market through which the firm must operate. These forces were described in the previous section entitled Target Market Analysis.
4.3.2 Business Participants
A number of other firms will compete with the Cambridge Strategy Group. Due to the size of the available market, it will be exceptionally difficult for any of these competitors to gain significant market share. However, it will also be difficult for the Cambridge Strategy Group to control the market.