78 CHAPTER 4 KNOW YOURSELF
Include a table listing your products or services, describing them briefly and indicating
the relative importance of each one. Relative importance is best illustrated by contri-
bution to net profit. For example, if you earn the same gross sales revenue from selling
computer hardware and software, but you make twice as much profit on the software,
then the software contributes twice as much to the bottom line.
Try to make your description less abstract by including a simple picture or diagram.
This is less important if the product is well known and probably unnecessary for a plan
that is not going outside your well-run organisation. It is critical if you have a new prod-
uct. You can illustrate services by being creative. A picture of a meeting might serve to
illustrate the services of an accountant. This might seem unnecessary, but it is surprising
how much a picture helps. Trust me.
Core competencies
You should by now have identified your core competencies – those areas where your
business has specific expertise. As already indicated, these competencies reflect the
aggregate of the experiences gained and the skills developed when handling specific
challenges and opportunities. They may also be derived from investment in particular
resources, including facilities, machinery and equipment. I prefer to define them loosely.
An alternative approach is to list competencies and assets separately.
This is a good point at which to indicate the unique factors relating to your products
and services. Examples include the following.
If you manufacture, explain your competitive advantage. We have one of the two
looms in the world capable of producing cloth in this width. The capital cost of a
new machine at … creates a significant barrier to entry … which tends to prevent
competitors from moving into … .
You almost certainly have more than one product or service. Indeed, this
is almost essential if you are looking for start-up funding. Venture capital
providers are very jumpy about a business with just one line. They have
this curious notion that the business will fold and they will wave goodbye to their
money if the demand for this single product or service dries up. You know of course
that you can expand or modify your lines and that, anyway, you can ‘create’ many
different products by market segmentation (discussed in Chapter 5).
You have to spell this out clearly. Unfortunately the problem is that as soon as you
show a range of goods and services, the nice people with money start fretting that
you might be losing focus. The middle course is to specify your products judiciously.