Untitled Document

Ascertaining the needs of prospective clients
By Nilooka Dissanayake
Athwelage Sarath, our imaginary entrepreneur is back to square one in business planning terms. His business idea has changed from a vegetable retail operation to a wholesale business.

But, is all his hard work in learning about the needs of vegetable consumers wasted? Not at all. He struck this gem of a new business idea because he took trouble to find out the needs of his future customers. He also knows his competitors and has a better idea of the market he is entering. In business, as in life, it may not necessarily be a bad idea to "lose and to start again at the beginning" and never breathe a word about the loss. What is needed is to learn from the process.

The challenge for Sarath now is how to build up a solid business case behind this idea which he feels as having great potential. Let us follow Sarath as he gets to work on this issue.

His first step is to make a list of potential wholesale buyers for vegetables. Supermarkets, large-scale vegetable shops, hotels and larger restaurants all come to mind. There are also the catering services, private hospitals and hostels. Sarath thinks that he should start with the private sector. Public sector sales require being registered for tenders at the beginning of each year and he is not an established business as yet. It is difficult for small businesses to qualify in the procedures anyway. It is a pity, he feels, that Sri Lanka does not have a system where small businesses have a percentage allocation in the tender awards of public corporations and large organisations.

Which categories of business clients should he focus on? Sarath decides to find out about the specialised needs of each category. They vary not only in needs, but also in their purchasing practices, volume requirements and in payment terms. Some may require performance guarantees and others will ask for long credit periods. The frequency of deliveries can vary depending on the sector and on each organisation and its buying behaviour. So, while Sarath found it relatively easy to observe the retail vegetable buyers, he has to work harder to obtain the same information for business customers. He wants to go and talk to the purchasing managers. But, feels that it may seem a bit premature to seek information directly. That may spoil his chances with them later.

Sarath's fiancée, Sumalee, who has been studying business practices comes to his rescue. "Why not compile a list of questions you need to pose in a survey form?" says she. "That will look more professional. And when you explain to the purchasing managers that your intention is to carry out a thorough study of their buying needs and practices, they too will become interested because it may prove to be beneficial to them." Sarath knows that some organisations will object. They might be suspicious and refuse to respond. Still, overall, it seems like a good strategy to obtain the information and also to get acquainted with the purchasing managers who may someday be his future customers.

"I read a little bit on finding out the needs of corporate customers," says Sumalee. And Sarath thanks his lucky stars for finding a partner who takes so much interest in his business. A supportive partner is a great asset to a small business operator. "I read a book called 'Sulu Vyaparaye Alavikaranaya' - (Marketing for the Small Business). It explains many areas that you need to find out about prospective business customers.

The main idea is to find out about their volumes of purchasing. That you can ask directly. Alternately, you can also find out about their sales or consumption. In some organisations, volumes may change depending on the time of year or the time of the month. Tourist hotels will need bigger volumes during the tourist season. If they have branches, ask if they buy centrally. Do you need to deliver at the branches? Where are cash transactions settled? All this needs to be asked, either in the survey form or verbally. You must ask about their specific needs. There is also a growing trend according to an article I read, of people looking for pesticide free, organically produced food. That is why some restaurants ask for organic vegetables. Even supermarkets are keen if you can provide things at a competitive price.

We will also have to learn about who makes the purchasing decisions and what their purchasing policies are. What do they expect as minimum requirements to qualify as a supplier? Do they ask for other references and experience? If so, getting your father involved in the business at the start will be a good move."

Sarath and Sumalee must not forget the payment terms and other conditions of the prospective buyers. Some large retailers, like supermarkets need 45 days credit. But, they do make allowances for fresh goods suppliers like Sarath since the goods have to be replenished regularly.

Does your own business idea entail dealing with business customers? What special needs, requirements and conditions apply to them and to their industry? It is necessary to obtain this information, especially as they relate to your cashflow planning and the operational plans. Even if you have solid orders, it is necessary to look into these areas early.

Once Sarath decides upon his specific customers, we will go ahead with the financial plan for his business. We look forward to answering the issues you face in your business planning process. You can reach us on btimes@wijeya.lk or 074-304100.

(The writer is the Managing Editor of Athwela Vyaparika Sangarawa (Athwela Business Journal), the only Sinhala management monthly targeting the small and medium sized business operators and its English version, Small Business International.)

Back to Business