Developing a Business Plan Presented by: Alan Barefield Associate Director, Southern Rural Development Center Jim McConnon Business & Economics Specialist and Associate Professor, University of Maine Business Skills Training San Antonio, Texas September 5, 2003

Ca$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 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 Plan Goal: You will learn how to develop a business plan Objectives: As a result of this session, 4 You will learn the reasons for developing a business plan 4 You will learn the key components of a business plan 4 You will learn the format of 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: 7 Is it feasible to operate my own business? 7 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? A business plan is a very important tool if you are starting a new business or expanding an existing one. Ø The business plan communicates to others how successful you are going to be. Ø Lending institutions require them to support loan applications. Ø Experience shows that successful businesses have a plan; the majority that fail do not. Ø A good business plan is your road map to success!

Key Components of a Business Plan The business plan covers six key areas: v The Industry, the Company, and the Products v Market Research and Analysis v Marketing Plan v Operating Plan v Management Team v Financial Plan

The 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: Ø The nature of the industry Ø The proposed business Ø The product the business plans to offer

The Industry Present the current status and outlook for the industry in which the business will operate. Ø New products and developments Ø New markets and customers Ø General trends affecting the business Ø Identify sources of information used to describe trends

The Company Write a detailed description of the proposed business venture, the products and services it will offer, and the principal customers. Ø Mission statement with goals and objectives Ø Ownership and legal form of the company Ø Reasons why the business will be successful

The Products or Services Describe in detail the products or services to be sold, as well as the application of the product or service. 4 Benefits to the customers 4 Competitive advantages 4 Unique features 4 Current state of development

Market 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. v Customers v Market Size and Trends v Competition v Market Share and Sales

Types 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 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

Customers Identify your target market and develop a customer profile. 4 Demographic profile 4 Lifestyle patterns 4 Expectations

Customer 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 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

Competition 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 Sales Summarize what it is about your product or service that will make it sell in the face of current and future competition. Ø Identify and list major customers and estimate potential sales Ø Estimate share of the market Ø Estimate sales in units and dollars for the next two to five years

Marketing Plan This section of the business plan describes the company’s marketing goals and objectives and how they will be achieved. Ø Overall Market Strategy Ø Pricing Ø Sales Tactics Ø Advertising and Promotion Ø Packaging Ø Marketing Plan Outline

Overall 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

Pricing The pricing strategy selected can mean the difference between success and failure. Ø Provide a detailed description of the pricing strategy for each product or service Ø Outline factors considered in developing pricing strategies Ø Discuss wholesale vs. retail pricing strategies Ø Discuss price levels, geographic terms, discount policies, etc.

Sales 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 Promotion Describe approaches the company will use to bring the product or service to the attention of the target market. Ü List advertising methods along with benefits and costs Ü Discuss promotional efforts and strategies Ü Publicity

Packaging Describe how the product will be packaged for the target market. * Package design * Package labeling * Packaging materials

Marketing 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: Ø Marketing situation Ø Marketing objectives Ø Marketing Strategies Ø Budget Ø Action plan Ø Evaluation

Questions???