Marketing Essentials

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Marketing Essentials
n Chapter 35 Developing a Business Plan
Section 35.1 The Business Plan
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SECTION 35.1
The Business Plan
What You'll Learn

• The purpose and importance of a business plan
• The major sections of a business plan
• How to describe and analyze a proposed business
  situation

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SECTION 35.1
The Business Plan
Why It's Important
It takes financing to start a new business. To
obtain financing requires a well-developed
business plan. A business plan is an invaluable
tool that helps an entrepreneur to plan business
goals, determine necessary resources, and clearly
identify how the new business will operate and be
managed.
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SECTION 35.1
The Business Plan
Key Terms

• business plan
• business philosophy
• trading area
• buying behavior

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SECTION 35.1
The Business Plan
Developing the Business Plan

• A business plan is a proposal that describes a
  new business to potential investors and lenders.
• A business plan should contain three main
  sections
• description and analysis of the proposed business
  situation
• organizational and marketing plan
• financial plan

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SECTION 35.1
The Business Plan
Description and Analysis of the Proposed
Business

• The description and analysis section introduces
  the proposed business concept. This section
  should clearly include
• the products and services the business will sell
• your personal business philosophy
• a self-analysis that describes your business
  experience, education, and training
• a trading area analysis, a market segment
  analysis, and an analysis of potential locations

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SECTION 35.1
The Business Plan
Type of Business, Business Philosophy, and
Type of Products
The type of business you plan to open includes
marketing research data or significant trends
that will influence the success of your business.
Your business philosophy tells how you think the
business should be run and shows your
understanding of your businesss role in the
marketplace. The product or service you will
offer should meet a consumer need and provide
consumer benefits.
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SECTION 35.1
The Business Plan
Self-Analysis
A self-analysis is a description of your personal
education, training, strengths, weaknesses, and a
plan for personal development in the field of
marketing.
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SECTION 35.1
The Business Plan
Trading Area Analysis
A trading area is the geographical area from
which a business draws its customers. Before
going into business, you must analyze the trading
area with respect to geographic, demographic, and
economic data, as well as competition.
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SECTION 35.1
The Business Plan
Geographic, Demographic, and Economic Data
Geographic data includes population distribution,
or how many people live in a certain area.
Demographics are identifiable and measurable
population statistics, such as age, gender,
marital status, and race/ethnicity. Economic
factors include economic growth projections,
trends in employment, interest rates, business
mergers, and governmental regulations.
Slide 1 of 2
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SECTION 35.1
The Business Plan
Geographic, Demographic, and Economic Data
Disposable income is the money your potential
customers have after paying taxes. A buying power
index helps business owners determine the buying
power for a given area by factoring in disposable
income, population size, and retail sales figures.
Slide 2 of 2
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SECTION 35.1
The Business Plan
Competition
For your trading area analysis, list all the
competitors in your trading area, along with
their types of products, prices, locations,
general quality of products, and their strengths
and weaknesses. You should be able to use these
factors to demonstrate how your business will be
superior to the competition.
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SECTION 35.1
The Business Plan
Market Segment Analysis
A market segment analysis is a description of
your target market and the buying behavior of
your potential customers. Your target market
represents the specific group of people you want
to reach. Buying behavior is the process
individuals use to decide what, from where, and
from whom they will buy.
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SECTION 35.1
The Business Plan
Analysis of Potential Locations
Location has a direct effect on your sales, which
makes this a vital decision. Important things to
consider are

• safety
• customer accessibility
• personal issues
• zoning and other regulations

• buy, lease, or build
• competing and complementary businesses
• hours of operation
• visibility

Slide 1 of 6
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SECTION 35.1
The Business Plan
Analysis of Potential Locations
Buy, Lease, or Build Will you buy, lease, or
build your facility? (Leasing is usually best for
most new businesses.) Compare rent or payments
and length of commitment as well as insurance
considerations.
Slide 2 of 6
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SECTION 35.1
The Business Plan
Analysis of Potential Locations
Competing and Complementary Businesses Consider
the number and size of potential competitors in
the areaif your business is similar, you may
want to locate near them to encourage comparison
shopping. A complementary business is one that
would help generate store traffic.
Slide 3 of 6
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SECTION 35.1
The Business Plan
Analysis of Potential Locations
Hours of Operation Your location will determine
your hours of operation and the number of
customers who will see and patronize your
business. Visibility Businesses that rely on
high visibility, such as restaurants, may spend
the extra money to locate in a highly visible
location.
Slide 4 of 6
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SECTION 35.1
The Business Plan
Analysis of Potential Locations
Safety Neighborhood safety should be a
consideration when choosing a business location.
Research the community's crime rate, and the
locations proximity to fire hydrants and fire
stations. Customer Accessibility Identify the
highways, streets, and transportation routes that
lead to your business site.
Slide 5 of 6
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SECTION 35.1
The Business Plan
Analysis of Potential Locations
Personal Issues Consider personal issues such as
the locations distance from family and friends,
proximity to your home, as well as its
atmosphere, and character. Zoning and Other
Regulations Learn about any local ordinances or
laws that may affect your business or prevent you
from locating in a particular commercial or
residential area.
Slide 6 of 6
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ASSESSMENT
35.1
Reviewing Key Terms and Concepts
1. What is a business plan, and why is it
important? 2. What are three sections of a
business plan? 3. What is a business philosophy?
Why is it important? 4. Define buying behavior.
Why is it important to understand customer buying
behavior in your target market? 5. Identify at
least three factors to consider when planning a
location for a business.
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ASSESSMENT
35.1
Thinking Critically
What are some of the factors that a new business
can control? What are some uncontrollable factors?
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35.1
Graphic Organizer
The Business Plan
I. Description and Analysis of the Proposed
Business
The Business Plan
II. Organization and Marketing Plan
III. Financial Plan
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Marketing Essentials
End of Section 35.1