Managing it all – or not! This is a very relevant question when it comes to your marketing plan. On the one hand, you want to demonstrate that there is a wide enough customer base, or “target market” so that your business will not only sustain itself, but grow and become profitable. Obviously, the extent to which there needs to be growth depends upon your business and goals.

If you are opening an environmentally friendly dry cleaning service you need to show that there is enough interest in the local neighborhood to run a solid small business with steady conservative growth. However, if you are planning on developing a nation-wide chain of these environmentally friendly dry cleaning services, then you obviously need to demonstrate that there will be substantial and rapid growth. Therefore, you will look at both the local as well as the national markets.

It’s important to define the scope of your market according to what makes sense for your business. This serves three particularly important purposes:

It demonstrates that you know your market. You’d be surprised by the number of people with whom I’ve worked that opened a business without really thinking who would buy their product and/or use their service. Investors want to feel comfortable that you, the business owner, already know your market and how to reach and entice them. They don’t want to give you money and then have you figure this out. That’s a waste of their money, plus, it’s risky. So it’s important to effectively communicate this in your business plan.

I recently read a business plan for a men’s retail clothing store in Chelsea , Manhattan that would sell cutting edge designers. Designer jeans would retail for $150 and higher. Up to the marketing section, it was a very solid business plan. The business owners seemed to be very familiar with retail and expressed a clear vision of their business concept. Yet the marketing section didn’t show the same level of clarity. If you have been through Chelsea , it is easy to picture this business – I could see it doing well in this particular neighborhood: the residential population is well to-do and there are already a number of high fashion-oriented stores and restaurants.

When describing their target market and its size, the authors said that their target market was all men in New York City between the ages of 25 and 59. They proceeded to show statistics on the number of men in NYC that fit this category.

It is tempting to show that there are millions of people who are interested in buying from your business. At times, however, this looks unrealistic and silly. I know plenty of men between the ages of 25 and 59 who reside in New York City who A) are not interested in fitted, cutting-edge style; and/or B) would NEVER, EVER spend $150 on a pair of jeans! I’m sure you do too! I do know some men who do fit this description, but certainly not every man that I know in NYC.

The business plan writers did not seem to have a realistic sense of their market and the size of their potential marker and this undermined what was otherwise a really good plan.

It helps you focus your attention. You’ve usually made a good guesstimate as to who is your customer base and therefore, it can help set the tone of your activities. For example, if you think the bulk of the customers for your environmentally friendly dry cleaning service will be environmentally-concerned baby boomers, then you might use one set of graphics and messaging on your marketing materials versus if your main customers are white-collar business professionals. For the business professionals you might stress pickup and delivery services as well as extended hours. Perhaps you might let them make online payments. However, if you are focusing on the environmentally-concerned baby boomers, you might include a lot of educational materials on the processes and detergents you use and how they are better for the environment.

It helps you make realistic plans for growth. I’ve read business plans that call for aggressive expansion in their first three years of operations. The financials tend to look pretty good at first glance. However, when you start to dig into the details behind these numbers, it becomes unclear as to whether or not the entrepreneur really thought through all of the activities that are necessary to execute this ambitious plan.

Sometimes the financials look fantastic, because the entrepreneur forgot to add the expense of hiring additional employees! Having a number of different groups of customers is great for the potential growth of your company, but it also means that you will need to do more. You might develop different marketing campaigns and product/service offerings.

If you plan to physically expand, it also means that you need to have the physical capability of scouting out new locations, signing leases, dealing with contractors, etc. You need to think through as to whether or not you can physically handle this growth and this market size.

So, my usual answer to “managing it all – or not?” is NOT. We’ve all heard about businesses that expanded too rapidly. I think that most businesses are best served focusing on a few target markets. Try to develop a good solid foundation with these core customers and then look to get “Big”.

More on the specifics of defining your target market in upcoming issues.