BUSINESS PLANNING
Business Planning Writing a Business Plan 2 Frankie Lim S3_Writing a Business Plan - Part 2 1 Business Plan Cover Page Table of Contents Executive Summary Business Description Industry Analysis The Market Development & Production Sales and Marketing Management Financial Data Frankie Lim S3_Writing a Business Plan - Part 2 2 Market Analysis Normally follows the industry analysis Industry analysis focuses on the broad business domain Market analysis breaks the industry into segments and focuses on a specific segment (target market) Better to serve a specific market very well then to service all of it! Frankie Lim S3_Writing a Business Plan - Part 2 3 Market Section Describes a target market Customers, competitors How it will compete in the marketplace Potential sales & market share (Marketing & sales section covers marketing/sales functions) Keep them separate Frankie Lim S3_Writing a Business Plan - Part 2 4 Market Section Like the industry analysis - It defines the nature of the business & the nature of the plan i.e.forecast of sales impacts on the firms manufacturing outputs, for the marketing plan, how many people to hire etc. By understanding the market the more it can match the product Frankie Lim S3_Writing a Business Plan - Part 2 5 Market Analysis Develops the product/services to the needs of the users Shows investors that the company has a well thought out target market Understanding customers Making sales, even with competition Communicates potential in the market Frankie Lim S3_Writing a Business Plan - Part 2 6 Market Analysis Latter factor important as - Has to be consistent with the goals of the organisation Investors want to see demonstration of sales and ROI 5 to 20 times the original investment Well developed marketing analysis usually takes considerable time Frankie Lim S3_Writing a Business Plan - Part 2 7 Market Analysis Segment to determine your customer May have more than one market in some cases Describe both/all market characteristics Example ??? Frankie Lim S3_Writing a Business Plan - Part 2 8 Market Segmentation If you have shown this in the business plan recap here If not - cover the basics Describe market segmentation - process of dividing market into subsets These must behave in the same way or have similar needs Frankie Lim S3_Writing a Business Plan - Part 2 9 How to segment? By different means - Geographically, country, province etc Demographically, age, gender, family size, income etc Psychographic variables - personality, life - style,values Product type - varies by product Frankie Lim S3_Writing a Business Plan - Part 2 10 Testing your assumptions Homogeneity of needs & wants appear within the segment Heterogeneity of needs & wants exist between the segments Differences in the segment must be small compared to differences across segments The segments should be distinct so that members can be identified Should be possible to determine the size of the segment Segment should be large enough to be profitable Frankie Lim S3_Writing a Business Plan - Part 2 11 Mintel This helps you different segmentation methods in different industries Consult trade directories Talk to major participants in your industry, suppliers, distributors, customers Frankie Lim S3_Writing a Business Plan - Part 2 12 Selection Select the target with the best prospects And that offers best ‘fit’ for you - professionally & personally Big mistake to tackle all the market! Too difficult/expensive Frankie Lim S3_Writing a Business Plan - Part 2 13 Selection Targeting one market allows the firm to become an expert in a particular area. Test the market by analysing trends Is it a large and healthy market? Frankie Lim S3_Writing a Business Plan - Part 2 14 Market Size & Trends An estimate as to its potential Show your methodology & assumptions Credibility of the plan will be affected if you guess If what you are selling is already available use Mintel/websites etc to track size of industries & segments Frankie Lim S3_Writing a Business Plan - Part 2 15 A market that doesn’t exist Marketing research is needed E.g. to determine size of the market open one store to assess the market This will be judged by: Reasonableness of assumptions made The degree to which the numbers are anchored to facts and sound analysis Degree of effort made to do this given time/budget constraints Frankie Lim S3_Writing a Business Plan - Part 2 16 Buyer Behaviour Behaviour in a given target market The more you know the more you can accommodate customer needs Focus on the core needs of the customer i.e. older people - social interaction Collect information about your segmentation method i.e. an understanding of a certain age group, & or lifestyle segment Frankie Lim S3_Writing a Business Plan - Part 2 17 B2B markets Determine the Decision Makers & Influencers in the DMU ( Decision making Unit) Length of buying process A Committee decision? High involvement purchase ? ( time & effort) Low involvement purchase? Frankie Lim S3_Writing a Business Plan - Part 2 18 Competitor Analysis Do not say you have no competitors People can spend their money in different ways Look for direct, indirect & potential competitors Use a model - a competitive analysis grid/map to look for issues/advantages Make adjustments if needed Frankie Lim S3_Writing a Business Plan - Part 2 19 Competitors Direct - offers a product/service similar to yours Indirect - close substitutes Future competitors - potential to move into your market Also make a statement about the scope and intensity of the competition Understand the strategies & behaviours of competitors Frankie Lim S3_Writing a Business Plan - Part 2 20 Estimate Sales and Market Share Track sales numbers in your industry Check trade associations (Mintel etc) Or find a comparable firm selling a comparable product Discuss your assumptions when estimating Use the internet for firms in your industry Frankie Lim S3_Writing a Business Plan - Part 2 21 Multiplication method Estimate total users of the product Estimate average price customer will be willing to pay Estimate the size of the market Start - ups often use a bottom up approach - Determine how many customers to expect Average each one will spend Computed weekly, monthly, yearly basis Frankie Lim S3_Writing a Business Plan - Part 2 22 Large segment Example H20 iPod waterproof housing Number of people in sports that get wet? Swimming, surfboarding etc Locate data on people who listen to their iPod while exercising Estimate the amount of people who engage in wet sports who are iPod users Primary research - % of people who would be your product & how much they would spend (sample) Frankie Lim S3_Writing a Business Plan - Part 2 23 Market Analysis Use a combination of these methods Rationalise your ideas on the plan Check for inconsistencies Frankie Lim S3_Writing a Business Plan - Part 2 24 Any Questions ??? Reflections Frankie Lim S3_Writing a Business Plan – Part 2 25
