Developing a Business PlanDeveloping a Business Plan

Presented by:

Alan BarefieldAssociate Director, Southern Rural Development Center

Jim McConnonBusiness & Economics Specialist and

Associate Professor, University of Maine

Business Skills TrainingSan Antonio, TexasSeptember 5, 2003

Ca$hing in on Business Opportunities CurriculumCa$hing in on Business Opportunities Curriculum

Chapter 6: Writing a Business Plan

Prepared by:

Beth Duncan, Ph.D.

Small Business Specialist & Extension Professor

Mississippi State University

Session OverviewSession Overview

I. Session Goal and Objectives

II. Business Planning Basics

III. Key Components of a Business Plan:

Industry, Company, and the Products Market Research & Analysis Marketing Plan

IV. Break

V. Key Components of a Business Plan (con’t):

Operating Plan Management Team Financial Plan

VI. Wrap-up and Evaluation

Developing a Business PlanDeveloping a Business Plan

Goal: You will learn how to develop a business plan

Objectives: As a result of this session,

You will learn the reasons for developing a business plan

You will learn the key components of a business plan

You will learn the format of a business plan

What is a Business Plan?What is a Business Plan?

A business plan is a written description of the goals and objectives of the business and how they are going to be achieved. It includes the mission of the business along with the production, organizing, marketing, and financing intentions:

Is it feasible to operate my own business?

Is my business idea feasible?

“If you don’t know where you’re going, it doesn’t matter which road you take.”

. . .anonymous

Why Develop a Business Plan?Why Develop a Business Plan?

A business plan is a very important tool if you are starting a new business or expanding an existing one.

The business plan communicates to others how successful you are going to be.

Lending institutions require them to support loan applications.

Experience shows that successful businesses have a plan; the majority that fail do not.

A good business plan is your road map to success!

Key Components of a Business PlanKey Components of a Business Plan

The business plan covers six key areas:

The Industry, the Company, and the Products

Market Research and Analysis

Marketing Plan

Operating Plan

Management Team

Financial Plan

The Industry, the Company, and the ProductsThe Industry, the Company, and the Products

This section of the business plan describes the business venture in a detailed but concise manner. You must clearly describe:

The nature of the industry

The proposed business

The product the business plans to offer

The IndustryThe Industry

Present the current status and outlook for the industry in which the business will operate.

New products and developments

New markets and customers

General trends affecting the business

Identify sources of information used to describe trends

The CompanyThe Company

Write a detailed description of the proposed business venture, the products and services it will offer, and the principal customers.

Mission statement with goals and objectives

Ownership and legal form of the company

Reasons why the business will be successful

The Products or ServicesThe Products or Services

Describe in detail the products or services to be sold, as well as the application of the product or service.

Benefits to the customers

Competitive advantages

Unique features

Current state of development

Market Research and AnalysisMarket Research and Analysis

This section of the business plan presents enough facts obtained through market research and analysis to determine if the product or service has a substantial market in a growing industry despite a competitive market.

Customers

Market Size and Trends

Competition

Market Share and Sales

Types of Market ResearchTypes of Market Research

PRIMARY RESEARCH = DO IT YOURSELF:

Observation Surveys Interviews

SECONDARY RESEARCH = USE EXISTING DATA:

Public Library College or Universities Chamber of Commerce Business Publications Trade Shows The Internet Census Information Sales Tax Data

Types of Market AnalysesTypes of Market Analyses

The information obtained through primary and secondary research techniques can be analyzed in a variety of ways.

Economic Trend Analysis

Political and Social Analysis

Customer Analysis

Market Potential Analysis

Competitive Analysis

CustomersCustomers

Identify your target market and develop a customer profile.

Demographic profile

Lifestyle patterns

Expectations

Customer ProfileCustomer Profile Age Income Education Gender Stage of business Type of business Size of business Location Behavior patterns Customer expectations Other ???

Who is your target audience? How will you reach this audience?

Market Size and TrendsMarket Size and Trends

Describe the primary market for the product, both geographically and in terms of sales volume.

Describe seasonal fluctuations

Discuss potential for growth

Discuss factors affecting growth

CompetitionCompetition

List the strengths and weaknesses of competitive products and services and list the companies that supply them.

Identify and list current and future competitors

Assess the competition on the basis of price, quality, performance, service, etc.

Discuss advantages and disadvantages of competing products or services

Market Share and SalesMarket Share and Sales

Summarize what it is about your product or service that will make it sell in the face of current and future competition.

Identify and list major customers and estimate potential sales

Estimate share of the market

Estimate sales in units and dollars for the next two to five years

Marketing PlanMarketing Plan

This section of the business plan describes the company’s marketing goals and objectives and how they will be achieved.

Overall Market Strategy

Pricing

Sales Tactics

Advertising and Promotion

Packaging

Marketing Plan Outline

Overall Market StrategyOverall Market Strategy

Describe the general marketing philosophy and strategy of the company.

Derived from market research and analysis results

Include discussion of markets targeted for sales promotions

List short-term and long-term marketing objectives

Discuss specific marketing tactics

PricingPricing

The pricing strategy selected can mean the difference between success and failure.

Provide a detailed description of the pricing strategy for each product or service

Outline factors considered in developing pricing strategies

Discuss wholesale vs. retail pricing strategies

Discuss price levels, geographic terms, discount policies, etc.

Sales TacticsSales Tactics

Describe specific actions that will be taken to generate sales and distribute the product or service to customers.

Analyze effectiveness of everything available within the sales system

List channels such as salespeople, agents, dealers, and direct mail services

Describe methods that will be used to distribute products to customers

Describe merchandising techniques

Advertising and PromotionAdvertising and Promotion

Describe approaches the company will use to bring the product or service to the attention of the target market.

List advertising methods along with benefits and costs

Discuss promotional efforts and strategies

Publicity

PackagingPackaging

Describe how the product will be packaged for the target market.

Package design

Package labeling

Packaging materials

Marketing Plan OutlineMarketing Plan Outline

A marketing plan outline is a useful tool for pulling together information related to the marketing plan. The marketing plan outline should include information on the following:

Marketing situation

Marketing objectives

Marketing Strategies

Budget

Action plan

Evaluation

Questions???