I have done a lot of capacity building on business planning previously, at varying levels and on different countries. But what makes the last 2 engagements the past 2 weeks different, is that both concerns business plans on commercialization of agricultural technologies.
Let me tell you about the one on evaluating already prepared business plans of 5 agricultural technologies for commercialization (coffee dryer, depulper, miller, among others). The common mistakes, i noticed in the business plans (where products are new and innovative) are:
1. Labeling substitutes as competitor.
What’s the difference? – a substitute is a different product ( or service) in form or make, but could provide the same function ( in part or full) , while a competitor is a similar product in make, purpose or function, but may come in slightly different presentation (packaging, accessories, etc). When a newly developed product is the subject of competitor analysis, as usually there are no similar products yet in the market, the next best thing to analyze are the ones it could possibly substitute with. Make sure, however, to label them as such: substitutes not competition, as the resultant market assessment will be misleading as well. And
2. Too general market identification and the inability to determine target market, in terms of size and location.
Again as the subject of the market study is a newly developed product, no actual users of technology yet, so the alternative is to identify would-be users. However, having no users yet is no excuse not to be able to have an idea of the market size. Case in point: to say that all farmer groups in a particular area will need the new product and thetotal number of farmer groups will be the total market for the product is too general. That’s like marketing to everybody, and to target everybody is a poor marketing strategy. Why- you spread your resources thinly with very low likelihood of making a sale (for lack of focus).
What need be done still is:
a) segment the prospective market, geographically as to high, medium or low producing regions. This is to help locate initial focus as to which region to introduce the product first ( where product’ssaleability will be higher);
b) then estimate, on the average, how many farmer groups ( of the commodity- coffee, in this case) are there in a particular area and how many of the newtechnology product being marketed will they be needing/purchasing and at what frequency ( based on useful life or replacement period).
These are just the common pitfalls in business planning. To avoid them, the key is in doing a focused market assessment with concrete approach in targeting and in estimating market size. Note that no matter how good your product is, if offered in an erroneously identified market, it will not sell. Consequently, the other parts of the business plan (technical, organizational and financial/financing) which are based an erroneously planned market strategies, will not deliver its intended purpose.
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