UNIT 2: Preparation of a Business Plan
Business Plan
• A written description of your business’s
future. That is all there is to it- a document
that describes what you plan to do and how
you plan to do it.
• Conveys your business goals, the strategies
you will use to meet them, potential
problems that may confront your business
and ways to solve them.
•
Primary Parts of a Business Plan
1. Business Concept - where you discuss the
industry, your business structure, your particular
product or service and how you plan to make your
business a success.
2. Marketplace Section - you describe and analyse
potential customers: who and where they are, what
makes them buy and so on. Here, you also describe
the competition and how you will position yourself to
beat it.
3. Financial Section - contains your income and cash
flow statement, balance sheet and other financial
ratios, such as break-even analysis. This part may
require help from your accountant and a good
spreadsheet software program.
How Long Should Your Business Plan be?
1. Miniplan - may consist of one to 10 pages and
should include at least cursory attention to such key
matters as a business concept, financing needs,
marketing plan, and financial statement especially
cash flow, income projection, and balance sheet.
2. Working Plan - is a tool to be used to operate
your business. It has to be long and detail but may be
short in presentation
3. Presentation Plan - suitable for showing to
bankers, investors, and outside the company. Almost
all the information in a presentation is going to be the
same as your working plan.
4. Electronic Plan - the majority of business plans
are composed on a computer of some kind, then
printed out and present it in hard copy.
Prepare a Strategic Plan Outlining the
Competitive Environment
The Business Environment
Strategic planning focuses largely on
managing interaction with environmental forces
which includes competitors, government, suppliers,
customers, various interest groups and other factors
that affect your business and its prospects.
Implementing the Strategy
Implementation is usually thought of as
something you do at the end of the strategic planning
process. The two primary issues that need to be
considered in the final implementation process are
communication and scheduling. Successfully
implementing a plan depends on effective
communication.
Management Tools for Strategic Implementation
SWOT Analysis – first step in formulating a
strategic plan.
Core Competencies - capabilities that add
strategic value to an organization’s product
or services. They are very difficult for
competitors to duplicate. This approach
enables companies to develop a long-term
competitive advantage, thereby maintaining
a leadership position in the market.
Gap Analysis - tool used for the
implementation of strategic plans. It looks at
an organization’s plan outlines activities and
programs designed to these close gaps.
Key Performance Indicators - are measure
that companies use to assess progress
towards strategic objectives. They provide
an effective way for organizations to
monitor how well they are doing.
Balanced Scorecard - it selects indicators
form different dimensions and groups them
to provide a “balance” of financial and non-
financial measures. The four dimensions of
the Balanced Scorecard are financial,
customer, operational, and employee
(learning and growth).
Strategic Map - integrates the strategic
plan with the functional areas of an
organization. It is the diagram that links
each of the strategic objectives with each
four dimensions of the Balanced Scorecard
objectives.
Focusing on the Appropriate Competition
Strategy
Cost - low production cost is an effective competitive
advantage, but it does not apply in all markets. The
key is to segment your market into sections that you
can reach at low cost and that cost sensitive.
Quality - some consumers prefer to pay more to get
better quality. If you have a superior design more
expertise or access to higher-quality materials, you
may have a competitive advantage on product
quality.
Brand - if your competitive advantage includes
selling a well-known brand, you have to use focus
strategy to make sure you are reaching the consumers
who have a positive image of the brand, need the
product and can afford it.
Service - companies can complete on service by
emphasizing customer satisfaction. Focus strategy for
companies that develop a service competitive
advantage relies less on market segmentation and
more on assigning resources to increase excellence in
customer service.
Business Competition Strategies
Cost Leadership - competitive strategy that aims to
reduce the prices of one company’s goods so they can
pilfer their competitors’ clientele. In the business
world, this is known as a price war.
New Product Development - innovation leads to the Marketing Objectives
development of new products, which, in turn, sets the
company apart from its competitors. The more Objectives should always be SMART:
products a company has to offer, the more chances it  Specific – for example, you set an objective
has to attract customers, especially when the products of getting new ten customers.
are innovative and exclusive.  Measurable – you need to be able to check
whether you have reached it or not when
Strategic Alliances - it is viewed as partnership. you review your plan.
Forming strategic alliances is a competitive maneuver  Achievable – have resources to achieve the
because it allows businesses to gain access to various objective. The key resources are usually
resources and expertise that competitors do not have. people and money.
 Realistic – targets should stretch you, not
Prepare a Marketing Plan demotivate you because they’re
It is good idea to introduce the main body of unreasonable.
 Time-bound – set deadline for achieving
the plan with a reminder of your overall business
the objective.
strategy, including:
Marketing Tactics
 What your business is about (your business
Many businesses find it helpful to think in terms of
mission)
the four P’s:
 Your key objectives
 Your broad strategy for achieving those  Product – what your product offers that
objectives your customers value
 Pricing – charge a premium price for a
quality product and service
How to Prepare a Marketing Plan
 Place – how and where you sell. May
1. Describe your market and the characteristics include using different distribution
and size of each market segment, review key channels.
market trends.  Promotion – how you reach your
2. Research what customer’s value, such as customers and potential customers.
product features, quality, service, image.
3. Compare the distribution channels for For a more comprehensive approach, you can extend
reaching customers (e.g. direct sales or this to seven P’s:
through retailers).
 People – ensure that your employee have the
4. Profile your competitors and what they are
right training.
offering.
 Processes – offer a consistent service that
5. Identify other key factors influencing your
suits your customers
business environment, carry out a SWOT
 Physical Evidence – appearance of your
analysis of your competitive position.
employee and premises can affect how
6. Review that effectiveness of previous
customer see your business
marketing initiatives such as advertising
campaigns or seasonal sales.
7. Assess the profitability and sales potential of Implementation of Your Marketing Plan
different customers and market segments,
and of different products or activities. Control – As well as setting out the schedule, the
8. Decide who to target among both existing plan needs to say how it will be controlled. A good
and potential customers, decide which
schedule and budget should make it easy to monitor
products to push those which need updating,
or replacing. progress.
9. Set specific objectives: for example,
How to Make a Marketing Plan for a New Product
retaining existing customers, increasing
order sizes, selling new products or wining Step 1. Develop your unique selling proposition,
new customers.
which identifies the qualities of your product that
10. Decide how you will price each product or
service. sets you apart from your competition.
11. Decide how you will distribute and sell; plan Step 2. Turn your business features into benefits.
how you can improve customer service and
satisfaction. Step 3. Identify your target market, which is the
12. Plan how you will promote your products or group of people who want or need what you are
services, and how you will keep in touch
selling.
with customers.
13. Identify customers, purchasing cycles to Step 4. Determine the places your target market
timetable marketing activities.
visits and the media outlets they read or watch.
14. Confirm the implications of your marketing
plan for the rest of your business: production
and training requirements, for instance.
15. Prepare realistic sales forecasts and budgets.
16. Include key indicators (e.g. new inquiries,
conversion rates, customers lost, order
value) and a system for measuring them in
your plan.