business plan chapter 2

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CHAP 2 - Summary

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Chapter2 business plan, marketing plan.

Marketing plan provide the basic for organization ,operation And financial planning it involve planning , pricing promotional activities and fair and even distributed of goods and services to the customers , to exploit the market opportunity maximally mainly the entrepreneur should therefore develop market development strategies. Tactics and policies, goal organization of these component will attract more potential customers, invite more contract and hence maximize the profit. To describe market opportunities and challenges the entrepreneur should carry out a market survey in order to have an in dept analysis of the intended for application purpose.

INTRODUCTION

Marketing of goods and service aims at satisfying the consumers fully by offering high quality product and giving them the best service possible. The owner aims at attending as many client as possible , inviting many contract and maximizing the business profit as time goes by first year of operation of the business will form the base and very firm foundation for the years to come. the consumers are expected to increased at favorable rate , enjoy the services offered and be comfortable in all sphere

The proposed business will be entirely targeting all classes of people in the whole community this includes.

High- class earners, middle- class earners, low – class earners

Wholesalers, retailers and individual customers also have a great role to play in uplifting the business t o hit its target. the entrepreneurs will make sure that the ingredient are we balanced and the nutritional content is high for the good health of the consumers. The consumers will be looking forward to getting high quality product , excellent services and fair and affordable prices. Since most of the potentials customer earn incomes , their frequency of ordering is high and this attract high demand and supply hence increasing the number of clients daily

The product and services offered will be economical, convenient and free from any contamination. Timing will be strictly observed to ensure that the product are fresh and fit for consumption. the purchasing pattern will be characterized by the time since there will daily purchase, weekly ,monthly seasonal and annual purchase

The product will be available to consumer full time to satisfy their needs maxi mainly and move with their tastes and preferences seasonal purchases will also be available to fit all the occasions at any given time

MARKET SHARE

The purposed business enterprise aims at securing the largest market share in the local market. It has two competitors, namely

Tosti cyber

Yummy cyber

The entrepreneur aims at maximizing sales. This will be achieved by the development of strategies which will be aid in beating the competitors good management and organization of all the activities in a comprehensive manner will make the entrepreneur showed the following outcomes

Competitors expected number of customer market share Names population percentage% Toist cyber 30000 25 Rift valley cyber 20000 15 Yummy cyber 350000 20 Others 45000 40

PIE CHART name tosti cyber25%

Rift valley 15%

COM PETITION

Strength and weakness analysis table

cyber strengths weakness tosti They are able to produce a variety of product unlike its competitors giving it a larger market share hence high profit The competitors is capable of conducting power full adverts which is mainly reaches out a large number of people

They concentrate so much on the product quantity any quality and not customer needs The advert are mostly meant to reach high class people hence the lower class many not get the information The standard packaging makes the product expensive therefore only few people will afford Rift valley cyber Long terms expensive since it was established many years ago stable business and has managed to employed many employed

Lack of adequate managerial skill of modern technology Low remuneration to worker leading inefficiency of production

METHODS OF PROMOTING AND ADVERTISING

The business will use promoting and advertising method to increase its sale business will allow and offer discount to the customers who purchase in large quantities the business will also offer free sample during the first week of its operation the method of advertising product will include

P OSTER - they should well designed printed and struck on the walls of building where people had access through example outside shop on street along path and road junction

THE ROAD – this will be done over the popular radio station like easy FM Coro FM and sauti ya mwananchi FM reaches majority of the people in the area

BRONCHURES – they will be distributed to customer by the sale people to give detailed information about the product

PRICING STREATEGY/POLICY

The entrepreneur will adopt a reasonable and which will be affordable to all customer Pricing method will include the cost of the product plus the desired profit. the profit ploughed will be used in improving the performance of the business and also facilitates growth (expansion) the prices

will differs depending on the season , occasion and to potential customer that purchase bulks factors to determine the prices ,

Competitor pricing

Discounting policy

Chargers for after sales

The desired volume of sales and profits

SALES TACTICS

The proposed business will sale agent to information and distribute the product to customers in the best way possible these sales tactics will help in attainment of desired objective and ensuring that sales are eventually distributed the business will also display the manufacture goods on the shelf in bakery guestroom where they can enquired detailed and place order

The entrepreneur will also ensure that he will produce high quality services and product which will motivate the sale people and the customer of the product combination of all sale tactics will lead to an increase in sale volume which will translate to higher profit in the long run and short run

DISTRIBUTION POLICY

The product will distributed through the following channels, directly to the customer that is producer- consumer

Producer-wholesales

Retailer-consumer

Producer-retailer- institution

The products will be transported by road transport. There is because the area has a network of tarmac road this transport will involve both stroller for short distance s and vehicles to consumer far a way. the cost of transporting will be 1900 per month transpiration of the product will face various difficult due to the delays caused by inadequate mean of transport but the entrepreneur will expand the means by purchasing more vehicles to cope up with these transport problem

• Multiple Choice

Course : Information Technology (BIT3107)

University : mount kenya university.

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Entrepreneurship: Business planning Chapter Two

This document discusses business planning and developing a business plan. It begins by explaining the importance of opportunity identification, business idea development, and preparing a business plan. It then covers identifying business opportunities through scanning the environment and evaluating opportunities. The document also discusses developing a business idea and various methods for generating business ideas. Finally, it describes the objectives and essential components of a business plan, including the cover sheet, executive summary, business concept description, and funding requirements. The overall document provides guidance on the key steps for developing a successful business plan. Read less

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• 1. CHAPTER TWO 2. BUSINESS PLANNING 2.1. Introduction This unit will help you to understand the concept of opportunity identification and evaluation, business idea development and how to prepare a business plan. Virtually to start any type of business or expand the existing one needs to work on opportunity identification and evaluation, business idea development and then prepare business plan. Lack of proper opportunity identification and evaluation, idea development process and business planning are the most often cited reasons for business failure. 3/21/2024 1
• 2. 2.2. Opportunity Identification and Evaluation Most authors agree that the initial stage in the entrepreneurial process is the identification and refinement of a viable economic opportunity that exists in the market. Without the recognition of an opportunity the entrepreneurial process is likely to result in failure. The opportunity identification and evaluation stage can be divided into five main steps namely; getting the idea/scanning the environment, identifying the opportunity, developing the opportunity, evaluating the opportunity and evaluating the team. 3/21/2024 2
• 3. 1. Scanning the Environment/ Getting the Idea While scanning the environment it may be provide you with idea and business opportunities. Idea is a thought or suggestion about a possible course of action. Synonymous with “idea” are the terms thought, intention, scheme, suggestion, proposal, initiative, spur, impulse, brainwave, insight, concept and connotation. Whereas, opportunity is a favorable time or set of circumstances for doing something. A business opportunity is a gap left in a market by those who currently serve it, 3/21/2024 3
• 4. 2. Opportunity Identification  Opportunity identification is ability to see, to discover and exploit opportunities that others miss.  It is the process of seeking out better ways of competing. 3. Opportunity Development  Opportunity development is the process of combining resources to pursue a market opportunity identified. This involves systematic research to refine the idea to the most promising high potential opportunity that can be transformed into marketable items. 3/21/2024 4
• 5. 4. Opportunity screening and evaluation: is the most critical element of the entrepreneurial process, as it allows the entrepreneur to assess whether the specific product or service has the returns needed for the resources required. 5. Assessmentof theEntrepreneurialTeam Regardless of how right the opportunity may seem to be, it will not make a successful business unless it is developed by a team with strong skills. 3/21/2024 5
• 6. 2.3. Business Idea Development  A business idea is a short and precise description of the basic operation of an intendedbusiness. Thereare threetypesof businessideas. Theyare: 1. OldIdea– Herean individualcopiesan existingbusinessideafromsomeone. 2. Old Idea with Modification – In this case the person accepts an old idea from someoneandthenmodifiesitinsomeway tofita potentialcustomer’sdemand. 3. A New Idea – This one involves the invention of something new for the first time. 3/21/2024 6
• 7. 2.4. Business Idea Identification  Before you start a business, you need to have a clear idea of the sort of business you want to run. Your business idea will tell you:  Which need will your business fulfill for the customers and what kind of customers will you attract?  What good or service will your business sell?  Who will your business sell to?  How is your business going to sell its goods or services?  How much will your business depend upon and impact the environment? A good business idea will be compatible with the sustainable use of natural resources and will respect the social and natural environment on which it depends. 3/21/2024 7
• 8. 2.5. Methods for Generating Business Ideas  The information gained from one approach may supplement another and help you to clearly describe your business ideas. Below, we will examine a few different approaches to generating business ideas. 1.Learn from successful business owners  You can learn a lot from people in your area who have already gone through the process of establishing a business. 2. Draw From Experience 2.1. Your own Experience  Look at the list of your interests, your experiences and your networks. Are there any possible business ideas that you can derive from your own past experience? Think about each type of experience. 2.2. Other People’s Experience The people around you are potential customers.  Ask your family and friends about the things they would like to find that are not locally available.  Expand your social knowledge by talking to people from different age groups, social classes, etc. 3/21/2024 8
• 9. 3. Survey Your Local Business Area  Another way of discovering business ideas is to look around your local community. Find out what type of businesses are already operating in your area and see if you can identify any gaps in the market. 4. Scanning Your Environment  You can use your creativity to find more business ideas in your area. It may be useful to think about business ideas by considering all the resources and institutions in your area. For example think about:  Natural resources,  Characteristics and skills of people in the local community,  Import substitution,  Waste products,  Publications & Trade fairs and exhibitions , etc. 5. Problem Inventory Analysis  It is a method of obtaining “New Idea” and solutions by focusing on problems 3/21/2024 9
• 10. 2.6. The Concept of Business Plan A business plan is a road map for starting and running a business. It provides information about the various functional requirements (marketing, finance, operations and human resources) for running a business.  A business plan is the blueprint of the step-by-step procedure that would be followed to convert a business idea into a successful business venture. 3/21/2024 10
• 11. objectives of a business plan The objectives of a business plan are to:  Give directions to the vision formulated by entrepreneur.  Objectively evaluate the prospects of business.  Monitor the progress after implementing the plan.  Persuade others to join the business.  Seek loans from financial institutions.  Visualize the concept in terms of market availability, organizational, operational and financial feasibility.  Guide the entrepreneur in the actual implementation of the plan.  Identify the strengths and weakness of the plan.  Identify challenges in terms of opportunities and threats  Identify the resources that would be required to implement the plan.  Document ownership arrangements, future prospects and projected growths of the business venture. 3/21/2024 11
• 12. 1.7. Developing Business Plan 2.7.1.Business Planning Process As discussed above, the successful entrepreneur lays down a step-by-step plan that she/he follows in starting a new business. This business plan acts as a guiding tool to the entrepreneur and is dynamic in nature – it needs continuous review and updating so that the plan remains viable even in changing business situations. The various steps involved in business planning process are discussed here below: 3/21/2024 12
• 13. 1. PreliminaryInvestigation  Before preparing the plan entrepreneur should: Review available business plans (if any). Draw key business assumptions on which the plans will be based (e.g. inflation, exchange rates, market growth, competitive pressures, etc.). Scan the external environment and internal environment to assess the strengths, weakness, opportunities and threats. Seek professional advice from a friend/relative or a person who is already into similar business (if any). 3/21/2024 13
• 14. 2. Opportunity Identification and Idea Generation  Opportunity identification and business idea generation is the first stage of businessplanning process.  It involves generation of new concepts, ideas, products or services to satisfy demand. 3. Environmental Scanning  Once a promising idea emerges through idea generation phase; the next step is environmental scanning, which is carried out to analyze the prospective strengths, weakness, opportunities and threats of the business enterprise. 4. FeasibilityAnalysis  Feasibility study is done to find whether the proposed project (considering the aboveenvironmental scanning) would be feasibleor not. 3/21/2024 14
• 15. 5. Report Preparation  After environmental scanning and feasibility analysis, a business plan reportis prepared.  It is a written document that describes step-by- step, the strategies involved in startingandrunninga business. 2.7.2. EssentialComponentsof BusinessPlan I) Cover Sheet: is like the cover page of the book. It mentions the name of the project, address of the headquarters (if any) and name and address of the promoters. II)ExecutiveSummary:is thefirstimpressionaboutthebusinessproposal.  A careful presentation of information should be done to attract the attentionof theevaluators. 3/21/2024 15
• 16. Cont.…  It should be in brief (not more than two or three pages) yet it should have all the factual details about the project that can improve its marketability.  It should briefly describe the company; mention some financial figures and some prominent features of the project.  Generating interest in the minds of the readers is the prime motive of the executive summary. III)The Business: This will give details about the business concept.  It will discuss the objective of the business, a brief history about the past performance of the company (if it is an old company), what would be the form of ownership (whether it would be a single proprietor, partnership, cooperative society or a company under company law). 3/21/2024 16
• 17. IV) Funding Requirement Since the investors and financial institutions are one of the key bodies examining the business plan report and it is one of the primary objectives of preparing the business plan report, a careful, well-planned funding requirement should be documented. It is also necessary to project how these requirements would be fulfilled.  Debt equity ratio should be prepared, which can give an indication about how much finance would the company require and how it would like to fund the project. 3/21/2024 17
• 18. V) The Product or Services A brief description of product/services is given in this subsection. It includes the key features of the product, the product range that would be provided to the customers and the advantages that the product holds over and above the similar products/ substitute products available in the market.  It also gives details about the patents, trademarks, copyrights, franchises, and licensing agreements. 3/21/2024 18
• 19. VI) The Plan Now the functional plans for marketing, finance, human resources and operations are to be drawn. 1) Marketing Plan: Marketing mix strategies are to be drawn, based on the market research. 2) Operational Plan: The operational plan would give information about (i) Plant location: why was a particular location chosen? Is it in the vicinity of the market, suppliers, labor or does it have an advantage of government subsidies for that particular location or are there any other specific reasons for choosing the particular location?, (ii) Plan for material requirements, inventory management and quality control are also drawn for identifying further costs and other related complexities of the business. Finally, the budget for operational plan is also drawn. 3/21/2024 19
• 20. 3) Organizational Plan it provides details about the manpower plan that would be required to put life into the business and it would also enlist the details about the laws that would be governed in managing the employees of the organization.  At the end the organizational plan is also budgeted. 3/21/2024 20
• 21. 4) Financial Plan  The financial plan is usually drawn for two to five years for an existing company. For a new organization the following projections are drawn: a) Projected Sales b) Projected Income and Expenditure Statement c) Projected Break Even Point d) Projected Profit and Loss Statement e) Projected Balance Sheet f)Projected Cash Flows g)Projected Funds Flow h)Projected Ratios 3/21/2024 21
• 22. VII) Critical Risks  The investors are interested in knowing the tentative risks to evaluate the viability of the business and to measure the risks involved in the business.  This can further give confidence to the investors as they can calculate the risks involved in the business from their perspectives as well. VIII) Exit Strategy: The exit strategies would provide details about how the organization would be dissolved, what would be the share of each stakeholder in case of winding-up of the organization. It further helps in measuring the risks involved in investing. IX)Appendix: The appendix can provide information about the Curriculum Vitae of the owners, Ownership Agreement and the like. 3/21/2024 22
• 23. Questions and Comments
• 24. 3/21/2024 24 THANK YOU!!! Set by: Aynetu Terefe Email.:[email protected]