Creating a business plan. Part 3. Market analysis

Market assessment

The detail of the market study and the chosen scale depend on how large the project will be. However, the basic steps remain almost the same for a shoemaker's workshop and for a large modern shoe factory. The characteristics of the market will show the prospects of entering it.

There are several types of markets:

Barren, where the possibility of implementation is practically non-existent.
The main one, where most of the exchange of goods takes place for the selected item.
Additional, which accounts for a small portion of sales.
Growing, with visible prospects for increasing sales.
Selective, in which the situation remains unclear and practical verification is necessary.
Layered, characterized by instability. It may end up being both active and completely useless.

Based on the nature of customer demand, markets can be industrial, military, or consumer. Everyone has their own differences.

For the defense industry, the main thing is high quality and the ability to quickly obtain raw materials. The industrial market requires precise execution of contracts. For ordinary consumers, affordable prices and prompt delivery mean a lot.

Back to contents

Action strategy

Depending on the identified results, a strategy for business penetration into the selected market is planned. New marketing strategies should be developed for the main market, the possibilities of lower cost of goods, promotions or charity events should be considered. In addition, existing markets respond well to the introduction of new modifications of already sold products.

It is necessary to conduct a thorough study of the target audience, learning the maximum amount of information about the future consumer, his needs in terms of quality, cost, quantity of goods consumed, and service expectations.

Surveys, questionnaires and other research methods will help determine what exactly the ideal product (service) of this category should be.

New markets need to be conquered by making advertising more functional and conducting an intensive search for its buyer. In addition, sometimes it makes sense to expand your business by penetrating into related areas and providing a full range of services, which allows you to reduce the cost of goods.

An example of a sales market assessment in a business plan could be the following document:

“In the area that produces goods (providing services or sales) in ____ there was an increase from ___ rub. up to ____ rub., which in percentage terms is equal to ___% for ___ years.
After studying these documents presented on the market (reports, documents from research companies, marketing agencies), within ___ years, market volumes are expected to increase by ___%. Directly by ___ year, the market volume will reach ____ million rubles.
Based on previous data, the most promising investment is ____, the demand trends for which are as stable as possible and are expected to increase. It is worth considering ____as the best option for starting a business in this region.”

Back to contents

Business plan development

Why do you need a business plan?

When starting any business, we usually have a general idea of its outcome.
But reality is always different, and often quite strongly, from our ideas about it. “When you start doing business, it turns out that, in addition to your main activity, you have to solve a huge number of other, less important issues,” admits Anvar Tuikin, CEO of Headmade. “And having a business plan always reminds you of the main indicators that you must achieve and prevents you from getting lost.” In general, this document is intended to solve four main tasks:

outline general goals (necessarily - with specific, measurable indicators)
capture the main ideas on paper to be able to reflect on the feasibility of the project
attract investors: having a complete business plan, you can make a short summary at the right time for presentation to investors
evaluate the effectiveness of the team’s work: after the deadlines specified in the business plan have passed, you will be able to evaluate what percentage you have fulfilled the plan, draw conclusions and, based on them, adjust the strategy

It’s useful to record hypotheses about your business in order to test and revise them as soon as possible,” says Vasily Petrechenko, Deputy General Director of the Moscow State University Science Park. The faster you bring a pilot product or service to market, the faster you will understand whether there is demand for it. Remember: starting any business is a theory that the product will sell. And the sooner you understand this, the better.

Business plan structure

Experts recommend drawing up a document that includes the following sections:

Title page
Table of contents
Project Summary
Description of the project, product or service
Marketing analysis
Financial indicators and forecasts
Project Risk Analysis
Applications

In this case, the volume of the business plan should not exceed 30-40 pages along with all necessary applications.

It is recommended to write a project summary last. Once you have worked through all the components of a business plan in detail, you will have a deeper understanding of the most important and attractive aspects of the business.

The resume should reflect:

The main idea of the business (aka the key idea): what are you going to earn money from and how. This can be expressed in two words, a few sentences, or even in the form of an image (of a product, for example).
Project mission: states as clearly as possible what benefits clients and owners will receive from the project. In addition, it is recommended to present the vision of the business as briefly and succinctly as possible over a certain period of time (in a year, three years, five years).
Business start date.
Key project employees.
Number of hired line employees.
Location of the company, existing branches.
Brief description of the service or product.
Product sales results.
History of financing.
Company growth prospects, including key financial and marketing prospects.

If a company is just beginning to develop and does not have the necessary information, it is worth emphasizing why the project will be in demand, what factors can contribute to the successful entry of the project into the market, and how the project differs from its competitors.

Save time searching for potential clients. Increase sales efficiency through B2B market segmentation and analysis.

To learn more

Business consultants recommend presenting information in the most easy-to-understand way - using tables, diagrams, and infographics. But detailed descriptions of certain aspects and interchangeable monotonous phrases in a resume are best avoided.

Description

In this section you need:

briefly describe the origin of the company
Briefly describe the target industry and its scale
outline the company's goals
write down the business model
describe in detail the technological component of the project and success factors
provide complete information about the company’s team, their key skills

In this chapter you need to describe the product or service as specifically and in detail as possible. And also tell what its competitive advantages are, what resources are needed for production, what are the possible ways for further development of the product.

Marketing analysis

This is another important and perhaps the most difficult part of the business plan. In essence, marketing analysis provides information about the company’s entry and development strategy in the market.

In this section, you need to tell how the project will capture the market share necessary to support the activity and demonstrate how interest in the project and its product will be maintained among consumers.

To do this you need:

identify and analyze the target market and present the company's capabilities in this market
identify the competitive environment
build company development strategies
present a sales forecast
support all assumptions with reliable information

Part of the business plan is marketing research. Here it is very important not to delve into secondary research and not to spend too much time searching for information on the Internet, advises Vasily Petrechenko (Moscow State University Science Park). – There’s a lot of far-fetched stuff there. Much more important is information about the sales funnel of this particular company, potential partners, preliminary agreements, etc. It is these hypotheses that should be tested and adjusted monthly.”

Financial indicators and forecasts

If you have a going concern, please include your income statement, balance sheet, and cash flow statement for the year. Then make a forecast for all three parameters at least three years in advance. Provide an analysis that shows how quickly your startup investment will pay off.

Risk analysis

Any new project is a risk in any case. The purpose of this section is to soberly assess the risks associated with the project, and also to consider options for countering these risks. That is, in this section it is necessary to identify potential problems that could significantly affect the results of the project, as well as propose a program of measures to reduce risks.

Applications

A good business plan only briefly describes the basics of the enterprise, so you need to attach all the necessary documents at the end. Everything else - registration documents, detailed marketing research data, complex technological issues - should be included in the appendices.

The main thing is not to spend too much time developing it, advises Petrechenko, who himself is a co-owner of several innovative enterprises. “If you want to do it beautifully, it’s better to hire professional consultants who will help save valuable time.” Although, in any case, it cannot be done without your direct participation, because we are talking about your business.

Conjuncture

The relationship between a product and the demand for it can be studied in various directions, depending on what kind of business we are talking about. If an already well-known brand is being promoted, you can find out the demand for products from this particular manufacturer. It also makes sense to work with products from the entire industry, offering a wide range, and study the demand of a region or a specific locality.

Demand is influenced by many aspects, including the characteristics of the population (its size, age component, average income), the economic situation in the region as a whole, local social and cultural characteristics, previously carried out by program marketers.

Back to contents

Financing

The most important factor in the success of an enterprise’s marketing activities is its effective pricing policy. The prices you set for your products or services will affect your sales, profit levels, and even your company's image.

To determine your pricing principles, formulate the main pricing objectives, create a pricing system that takes into account all the costs of the enterprise, competition and industry practices. As a rule, when calculating prices, they are guided by demand, and not by the cost of the product.

That is, you don’t just add a certain markup to the cost of the product, guided by the principle “the more, the better,” but proceed from how much consumers want to pay (and will pay) for your product or service.

For example:

The cost of producing a unit of production is ___ rubles. Thus, we need a profit of __% to cover all expenses and generate income. Therefore, the selling price of the product must be at least ___ rubles.

Describe the optimal order sizes and possible forms of payment. The new company will most likely have difficulty obtaining all the necessary funds on credit. And even if you receive the full amount, it will not be on the most favorable terms. Suppliers are also unlikely to agree to work with you on installments or credit, at least at first.

Problems with timely receipt of payments from customers and credits from suppliers can be a serious obstacle to new business. Therefore, if you are going to engage in sales on credit, you need to determine the expected period for receiving payments.

This information will be of interest to potential investors (including banks). Do not underestimate the number of days to receive payments. After all, you are risking your money. Try to give a realistic (and in some cases even pessimistic) assessment of these deadlines.

, the conditions for the acquisition of raw materials, supplies and components, as well as the level of inventory, are also important

If everything is more or less clear about the conditions for purchasing raw materials and materials, then assessing the level of inventories often causes certain difficulties for beginning entrepreneurs.

Insufficient or too large volumes of purchases will soon lead to financial problems. Unsold goods that lie in warehouses simply take up space and become obsolete, so that selling them becomes increasingly difficult, and in the end, completely impossible.

To avoid this and increase your profits, install an inventory control and management system.

It doesn't matter whether you sell a product or provide a service to your customers, you must constantly maintain a level of inventory that will allow you to avoid a decline in sales. To do this, offer a wide range of products, but without a noticeable predominance of cheap and popular products.

Buy in large quantities, which will give you the opportunity to get a big discount from the supplier, but do not reduce the duration of your inventory turnover (that is, the number of days it takes you to sell the average inventory of goods in your warehouse). Make sure that inventory levels are always sufficient and exclude obsolete, illiquid goods from them.

For example:

In the athletic apparel retail industry, a key success factor is maintaining adequate inventory levels to meet seasonal demand and avoid the overstocking that causes constant large sales. To solve this problem, we determined that to achieve maximum sales income in the amount of ____ rub. and in order to avoid losses, the cost of the necessary supplies should be ___ rubles.

If, when creating a business, production cooperation with other companies is expected (for example, you are going to seek help from contractors in the development and/or production of your products), this also needs to be reflected in your plan.

Proceed to preparing the “Market Analysis” section of the business plan

Return to the list of instructions for drawing up a business plan

Tatiana Nikitina

, Founder of the portal openbusiness.ru.
Entrepreneur. Business trainer. (c) www.openbusiness.ru - portal of business plans and guides for starting a small business 01/26/2018
450 people are studying this business today.

In 30 days, this business was viewed 6,921 times.

Save the article to study the material carefully

Remember article

You can save this page using:

Facebook

How to make money from the services of handymen from 200,000 rubles per month?

Anti-crisis business. Working in quarantine. Growing market. Payback 4-6 months. Support program - we will help you bring your personal income up to 2,789,000 ₽/year, even if this is your first...

What business to open during the 2020 crisis?

New profitable niche. A business that does not require employees or premises. Minimum investment. Turnkey training in two days.

Learn from scratch a new profession that has become a hit in 2020.

8 practitioner speakers will share their experience of starting a business from scratch. Complete immersion into a new profession in a free online conference.

Create your own fitness club with the famous brand S.S.S.R.

Get an economic calculation for free! Over the years, we have found an approach to working for results. We will share with you our best practices, knowledge and experience and how to build business processes

How to organize an advertising tender

How an advertising tender is conducted, what types of tenders there are, what their goals are and the rules for conducting them, what the brief with the task should include - we’ll talk about all this in this article.

How to analyze the competitiveness of enterprises

Competition and competitiveness - what do these terms mean? By what indicators can one judge that one company is more competitive than another? Let's answer these questions.

What is the Moscow Small Business Lending Fund (Moscow Guarantee Fund)

What is the Moscow Small Business Lending Fund (Moscow Guarantee Fund)? To whom and how does it provide assistance? Scheme of the fund's work.

Hidden factors in pricing

When we look at price tags in stores or on the Internet, choosing this or that product, sometimes we have a question, why is this or that product more expensive or cheaper than its analogue?

Risks in business planning

Lately, when I am asked to “calculate the risks” for a particular business project, I tell my respected clients not to even “bother” about this. And that's why…

Step Eight: Sales Plan

This section is one of the main and mandatory for all types of companies and organizations. It reflects the sales strategy of the enterprise at various stages of its existence and proves the ability to sell planned volumes of products...

Everyone steals, or the Anatomy of shoplifting

The experience of retailers shows that everyone steals: cashiers, salespeople, buyers, purchasing managers and even security guards. Another question is how exactly they do this, and how it can be prevented.

How to write an investment memorandum

What should an ideal investment memorandum look like? I propose to look at this issue from the point of view of its attractiveness for investors and the issues that most concern them.

PSEDA in Russia: list of territories, preferences, pitfalls

For the manufacturing sector in Russia there are economic zones with special conditions for creating and running a business, called TASED. What are these zones, and what preferences apply to them?

Success stories: how to grow from a micro-enterprise to a modern multi-brand confectionery factory

As part of the “Success Stories” project, we want to talk about the company that has been linked by many years of successful cooperation with the Small Business Lending Assistance Fund.

MBM.RU: where to find out about business support measures in Moscow

In this article we will tell you where in Moscow you can find out about the types of support for those who are planning to start a business or already own their own business.

Availability of demand

Market analysis in a business plan necessarily contains demand research. It is this value that indicates the need to produce goods. Current demand is determined by the number of goods needed to fill the sales market, their optimal cost for customers and the number of customers ready to purchase goods in a given region.

But there is also future demand, which is much more difficult to accurately calculate. Existing trends in the development of this market segment are taken into account, possible new factors are predicted, including their creation by experienced marketers.

The demand not only for the product itself changes, but also for its cost. This variable is called elasticity of demand and is calculated by the formula:

Er—cost elasticity;
Q1 - the emergence of new requests for a product after a price change;
Q0 is the initial demand at the same cost;
P1 - new cost;
P0 is the initial cost.

The elasticity of demand shows its change when the price deviates by 1%, demonstrating the dependence of demand on the pricing policy in a given region. Calculations can show what the maximum value the market will accept in a given area. And, although only the highest level specialists can accurately calculate it, even approximate calculations will make the business plan much more effective.

Back to contents

Competition

Today it is difficult to find a segment in which there is no competition at all, but it is possible to find sufficient space to obtain your own business niche. You can find out whether this is possible only after receiving information about competing structures:

the range they offer;
the cost of goods and services, their quality;
exactly how the implementation takes place;
at what level is advertising in this segment;
ideally, how they see the prospects for their future activities.

It is necessary to evaluate not only the possibility of entering free space, but also the losses that may arise due to the retaliatory actions of competitors.

Additionally, it is necessary to examine the production and economic activities of competitors. This can say a lot about pricing prospects, future development planning and market strategy. Only then can you work on countermeasures, as well as determine the exact characteristics that a competitive product (or service) should have. The emphasis may be on quality, pricing or customer service.

Back to contents

Pricing

Having learned what the maximum acceptable price should be for a product (service) on the market at the moment, you need to compare it with your capabilities. The influence of this factor on sales volumes is enormous. Not only the cost of production should be important, but also the pricing policy of competitors, the payment capabilities of consumers, as well as the net income necessary for profitability.

On the other hand, unique product qualities, additional functionality and other successful discoveries will help increase the cost of products and the number of sales. If there are any, you need to take them into account in the sales plan in the business plan.

Back to contents

Methods of promoting products on the market

Actually, everything here is clear from the subtitle. In this section, you should show the ways in which you will market your product. One of the points that you should pay close attention to is the company's pricing strategy. First of all, it is the cost of the proposed product that affects the level of its sales, and, accordingly, the amount of profit.

Moreover, the business plan must contain all calculations for setting the price of a product, an analysis of prices for similar products from competitors, the possibility of price fluctuations upward or downward, and the reasons for the occurrence of such situations.

Writing example
When setting prices for products, the following were taken into account: the cost of production of one unit, the costs of moving along the logistics chain, and the cost of similar goods from competitors.
By establishing the average market price for the products sold, the company will reach the planned profit volume in __ days/months/years. But since our product has additional unique parameters (list), it became possible to set a price per unit of product that is __% higher than the average price on the market.
The results of a survey among potential buyers showed that there is a fairly high demand for such a product, and the majority consider the proposed price acceptable and are ready to purchase the product at that price.

If you already have a price list for the products you offer, be sure to attach it to your business plan. Use in the description the most effective existing sales scheme - offering a product or service:

To the right people - your target audience
At the right time - based on the availability of the same target audience
In the right place - based on the location of the target audience
In the required quantity
At a price that is acceptable to you and to them
At the lowest possible cost to you

In addition to the pricing policy, indicate the tools with which you are going to make your product known to consumers, its distribution scheme, methods of stimulating sales, the possibility of service, warranty, and post-warranty service, the possibility of feedback from customers.

In addition to describing these methods, justify their effectiveness in relation to the products offered, why you chose them and not any others, consider the use of “traditional” advertising in the media, the Internet, the possibility of holding various promotions, establishing discounts, taking part in exhibitions, etc. d.

Distribution system

We are talking about exactly how you can achieve maximum sales of goods and services. The following options are possible:

Receipt directly to consumers. It makes it possible to get a large net profit, but significantly limits sales volumes.
Through a network of distributors. The net profit from each sale will be lower, but the volumes will be large. In this regard, the difficulty lies in recruiting qualified employees locally.
Through wholesalers. The profit from each sale will be minimal, but sales volumes will increase and sales time will be reduced.

Sales options can be combined depending on the capabilities of the entrepreneur, the region in which the activity is carried out, and the specifics of local legislation.

Back to contents

BP sections

The business plan includes the following sections:

The title page, which displays the name of the project and the structure where the launch and implementation of the software product project is planned. It is important to indicate the full name of the company director, contact information of the people responsible for writing the BP, and the date the document was created.
A memorandum of non-disclosure that will guarantee the protection of a unique business idea and will not allow it to be stolen. The file contains a requirement to keep confidential any information obtained during the reading of the document. Thus, violation of norms will be prosecuted by law.
Brief summary. It is important to keep in mind that it must be completed at the end of writing the BP. This is like an excerpt from the entire document, in which it is advisable to characterize the key points related to monetary indicators and the business idea as a whole.

Development prospects

Depending on the scale of the project, the prospects for business development should be calculated. It could be:

turning a small enterprise into a regional network;
expansion of production capacity;
offering new, related products and services;
entering into cooperation with other regions, including export.

For each direction, it is necessary to make additional calculations that will demonstrate the current situation and immediate prospects for market trends, including demand, pricing, changes in demographic, financial and social factors in the expansion regions.

It is imperative to indicate the directions of the advertising campaign, accurately describing the methods used, their dependence on sales seasons and the characteristics of the region.

As a final result, the analysis of the sales market in the business plan should help determine the optimal option, which would be characterized by:

sufficient capacity to introduce the product into the selected segment;
promising for possible development of demand and growth in sales costs;
minimal number of competitors;
the presence of partially unsatisfied demand for this group of goods.

Only such a market can become a successful field for entrepreneurial activity, the key to creating a promising, profitable and rapidly growing structure. The analysis task is quite complex, but its solution is extremely necessary.

Back to contents