Defining the Business plan
Scope and value of the Business plan
Writing the Business plan
The Marketing plan
Marketing research for a new venture
Characteristics of a Marketing plan
Steps in preparing a marketing plan
Defining the Business Plan
A good business plan must be developed in order to exploit the defined opportunities. This is a very time consuming phase of the entrepreneurial process. An entrepreneur usually has not prepared a business plan before and does not have the resources available to do a good job. The business plan is a written document prepared by the entrepreneur that describes all the relevant external and internal elements involved in starting a new venture. It is often an integration of functional plan such as marketing, finance, manufacturing, technological, operational, organizational, and human. It also addresses both short-term and long-term decision making for the first three years of operation <Belinda Guadarrama>. The business plan basically answers the following: where am I now? Where am I going? How will I get there? Profit analysis is done while writing business plan.
|No Plan, No Money: Without a business plan, banks or investors will not entertain the thought of financing your business. It is your only foot in the door, so make sure it shines.|
If we think of the business plan as a road map, we might better understand its significance. Let’s suppose you were trying to decide whether to drive from Pulchowk to Koteshwor. There are a number of possible routes, each requiring different time frames and costs. Like the entrepreneur, the traveler must make some important decisions and gather information before preparing the plan.
The travel plan would consider external factors such as emergency car repair, weather conditions, road conditions, sights to see, and available campgrounds. These factors are basically uncontrollable by the traveler but must be considered in the plan, just as the entrepreneur would consider external factors such as new regulations, competition, social changes, changes in consumer needs, or new technology.
On other hand, the traveler does have some idea of how much money is available; how much time he/she has; and the choices of highways, roads, campgrounds, sights. Similarly, the entrepreneur has some control over manufacturing, marketing, and personnel in the new venture.
Thus, the business plan responds to three questions; where am I now? Where am I going? How do I get there? Then the entrepreneur will be able to determine how much money will be needed from the existing sources or new sources to achieve the plan.
Who Should Write the Business Plan
The business plan should be prepared by the entrepreneur; however he/she may consult with many other sources in its preparation. Lawyers, accountants, marketing consultants, and engineering are useful in the preparation of the plan. Some of the above sources are be found though services offered by the small business.
Writing the Business plan
- Introductory Page
- Name and address of business
- Name and address of principal
- Nature of business
- Statement of financing needed
- Statement of confidentiality of report
- Executive Summary
- Industry Analysis
- Future outlook and trends
- Analysis of competitors
- Market segmentation
- Industry and market forecasts
- Description of Venture
- Size of business
- Office equipment and personnel
- Background of entrepreneurs
- Production Plan
- Manufacturing process
- Physical plant
- Machinery and equipment
- Name of suppliers of raw materials
- Operational Plan
- Description of company’s operation
- Flow of orders for goods and services
- Technology utilization
- Marketing Plan
- Product forecast
- Organizational Plan
- Form of ownership
- Identification of partners or principal shareholders
- Authority of principals
- Management team background
- Roles and responsibilities of members of organization
- Assessment of Risk
- Evaluate weakness of business
- New technologies
- Contingency plans
- Financial Plan
- Pro forma income statement
- Cash flow projections
- Pro forma balance sheet
- Break-even analysis
- Sources and application of funds
- Market research data
- Price lists from suppliers
The Marketing Plan
The marketing plan is an important part of the business plan since it describes how the product or services will be distributed, priced and promoted. Marketing research evidence to support any of the critical marketing decision strategies as well as for forecasting sales should be described in this section. Specific forecast for products or services are indicated in order to project profitability of the venture. Potential investors regard the marketing plan as critical to the success of the new venture. Thus, the entrepreneur should make every effort to prepare as comprehensive and detailed a plan as possible so that investors can be clear as to what the goals of the venture are and what strategies are to be implemented to effectively achieve these goals. Marketing planning will be an annual requirement for the entrepreneur and should be regarded as the road map for short-term decision making.
|Marketing plan describes market condition strategy related to how products or services will be distributed, priced and promoted.|
Prior to the preparation of the marketing plan the entrepreneur will need to complete the industry analysis section of the business plan. The primary focus of the industry analysis is to provide sufficient knowledge of the environment (national and local market) that can affect marketing strategy decision making. The marketing plan may add important valuable insights that can assist the entrepreneur in determining the most effective market position, setting market goals and objectives, and determining what action programs are necessary to meet these goals and objectives.
The information on competitors can be gathered initially by using as much public information as possible and then complementing this with a marketing research. Newspaper articles, websites, catalogs, promotions, interviews with distributors and customers and any other marketing strategy or company information available should be reviewed.
Marketing Research for New Venture
Information for developing the marketing plan may necessitate conducting some marketing research. Marketing research involves the gathering of data in order to determine such information as who will buy the product or service , what is the size the potential market, what price should be charged, what is the most appropriate distribution channel, and what is the most effective promotion strategy to inform and reach potential customers. Since marketing research cost very significantly, the entrepreneur will need to access available resource and the information needed. There are also some research techniques that are not costly and can provide, at least initially, significant evidence to support the market potential for the new venture. One of these techniques is the focus group, which is discussed later in this section.
Steps in Marketing Research for the New Venture
Step 1: Defining the Purpose or Objectives-> The most effective way to begin is for the entrepreneur to sit down and make a list of the information that will be needed to prepare the marketing plan. For example, the entrepreneur may think there is a market for his or her product but not be sure who the consumers will be or even whether the product is appropriate in its present form. This one objective would be to ask people what they think of the product or services and whether they would buy it, and to collect some background demographics and attitudes of these individuals. This would satisfy the objective or problem that the entrepreneur defined above. Other objectives may be to determine the following:
- How much potential consumers would be willing to pay for the product or services.
- Where potential customers would prefer to purchase the product or services.
- Where the customer would expect to hear about or learn about such a product or series.
Step 2: Gathering Data From Secondary Sources-> There are many market research secondary sources that may be used to address the specific objectives of the project indentified in step one. As mentioned, trade magazines, newspaper articles, libraries, government agencies, and the Internet and provide much information on the industry market and competitors. The internet can even be used to gather informal primary data through chat group.
Commercial data may also be available, but the cost may be prohibitive to entrepreneur. However, business libraries may subscribe to some of these commercial services such as Nielsen Indexes, Audits and Survey’s National Market Indexes, Selling Areas Marketing Inc. (SAMI) and information resources. Before considering either primary sources or commercial sources of information, the entrepreneur should exhaust all free secondary sources.
Step 3: Gathering Information from Primary Sources -> information that is new is primary data. Gathering primary data involves a data collection procedure such as observation, interviewing, experimentation and usually a data collection instrument such as questionnaire, observation is the simplest approach. The entrepreneur might observe potential customers and records some aspect of their buying behavior. One study of new ventures found that the most successful ventures were focused on information about competitors, the customer, and the industry using trade association and recent publications.
Interviewing or surveying is the most common approach used to gather market information. It is more expensive than observation but is more likely to generate more meaningful information. Interviews would be conducted in person, by telephone, or through the mail, each of these methods offers advantages and disadvantages to the entrepreneur and should be evaluated accordingly.
Step 4: Analyzing and Interpreting the Results -> Depending on the size of the sample, the entrepreneur can hand-tabulate the results or entre them on a computer. In either case, the results should be evaluated and interpreted in response to the research objectives that were specified in the first step of the research process. Often, summarizing the answers to questions will give some preliminary insight. Then data can be Cross-tabulated in order to provide more focused results. For example, the entrepreneur may want to compare the results to questions by different age groups, sex, occupation, location and so on. Continuing this fine-tuning can provide valuable insights particularly regarding the segmentation of the market.
Characteristics of a Marketing Plan
- It should provide a strategy for accomplishing the company mission or goal.
- It should be based on facts and valid assumption.
- It must provide for the use of existing resources. Allocation of all equipment, financial resources and human resources must be described.
- An appropriate organization must be described to implement the marketing plan.
- It should provide for continuity so that each annual marketing plan can build on it, successfully meeting longer-term goals and objectives.
- It should be simple short. A voluminous plan will be placed in a desk drawer and likely never used. However, the plan should not be short that the details on how to accomplish a goal are excluded.
- The success of the plan may depend on its flexibility. Changes, if necessary, should be incorporated by including ‘what if’ scenarios and appropriate responding strategies.
- It should specify performance criteria that will be monitored and controlled. For example, the entrepreneur may establish an annual performance criterion of 10% of market share in a designated geographic area. To attain this goal, certain expectation should be made at given time periods. If but attained, then new strategy or performance standards may be established.